Suncorp Group Limited (SUN) Earnings Call Transcript & Summary

Well, good morning, everyone, and welcome to those joining us here in Shelley Street and obviously online around the country and into New Zealand. So, let me start with the usual housekeeping matters, and I'll ask everyone if they could put their phones on silent and obviously, in the event of an emergency to follow the directions of our team. I'd also acknowledge the traditional owners of the lands on which we meet and pay our respects to Elders past and present. Now we've got a very full agenda today and a lot to cover, so I'm going to try and keep my comments as brief as they can be upfront before we hand off to the team. As always, I'm going to start with purpose, and this is the inverted triangle that guides everything we do at Suncorp. I joined the company in early 2006 and 3 weeks later, Cyclone Larry barreled through far North Queensland. As a new starter, it was my job to be dispatched Innisfail to observe our claims teams on the ground. Back in those days, as some of you will recall, our market share in those parts of Queensland was around 70%. So as I surveyed the damage, the widespread damage that occurred across Innisfail, I soon realized that -- not only were we responding to an insurance contract, but we were, in fact, putting lives and communities back together. That was my first introduction to insurance and the power of purpose. And of course, I've seen it play out in unfortunately, too many events since that point in time. So today, we're going to talk a lot about strategy, about technology, about process and about efficiency, but take my word for it, it's the glue that holds everything together at Suncorp is purpose. Our purpose delivered through our people to the benefit of our customers and the community will always lead to a sustainable and growing business for our shareholders. And while today's presentation is being delivered to our investors, it would be remiss not to make mention of the current cost of living challenges being faced by our customers. And we absolutely recognize the concurrence of reinsurance pricing, economy-wide inflation, supply chain disruption. And the major claims events that we've seen have manifested in elevated complaints and, in some cases, opt-outs, opting out of insurance. But be assured that every initiative that we discuss today is designed to improve the way we deliver contemporary and affordable insurance products. In the short term, that means a comprehensive response to the recent report on the -- from the Parliamentary Flood Inquiry and Lisa will go through some of that soon. But in the medium to longer term, it's clear to us that insurance needs to keep pace with the evolving expectations of its customers. Modern, intelligent cloud-based core systems that allow agility and innovation in product design, They'll be the rule rather than the exception. Claims processes will become frictionless but with enhanced safety nets to manage complexity and, of course, vulnerability. And alongside this process and operational efficiency will reduce the burden on pricing when input costs inevitably rise. Now as Jeremy will go through, having established the financial architecture of our business, we expect the dividends of the strategy that you'll hear of today to be shared amongst our investors, our customers and, of course, our people. And that's the basis of a sustainable purpose-led business. Now moving to the next slide, this is one that will be very familiar to you and it outlines the journey to today and the dual objectives of simplification and modernization. Now when our team came together in 2020, we quickly realized that our conglomerate structure created inherent complexity. And that we would increasingly be confronted with difficult capital allocation decisions amid heightened regulatory and political focus. Importantly, we couldn't see a future where the value of the group would be greater than the sum of its parts. Subject to the final approvals being received from the RBNZ, the 5-year simplification of our group structure will come to an end. We will emerge as a pure-play trans-Tasman general insurer with a complete focus from the Board through the executive to every member of our team on delivering the program of work that we'll go through today. So I first introduced this slide at the full year in August, and it will be the basis upon which we will set the agenda for today. Starting at the top, I've already talked about purpose. Our ambition is to be recognized as the leading trans-Tasman general insurer. Now it's too narrow to describe this as simply being better than our large, listed competitor. It's about being better than the smaller players, the motoring clubs, the retail distributors and anyone else that might come along as the insurance industry transitions over time. Our 5 portfolios, which are below that reflect the breadth of our business, and we'll spend some time working through these today. But importantly, the organization structure has now been centered around these 5 portfolios with the executives that you hear from today having end-to-end accountability to deliver a balanced set of targets. It's a balanced set of targets, including financial targets, but also customer targets and other key measures for the business' sustainability. Our core foundations are very strong. We have a suite of well-known and highly regarded brands, which we see as a competitive advantage. We have disciplined underwriting and risk appetite that reflects now our pure-play status. We've got a best -- commitment to best practice ESG standards. And of course, we've got a very strong balance sheet with a capacity to explore innovative reinsurance solutions. Now you'll hear today that we are working with world-class technology partners on the modernization and integration of our core policy, pricing and customer platforms as we continue our journey to becoming a digital insurer. Now while all aspects of our platform modernization journey contribute to the same, that's the aim of being a digital insurer. We refer to the policy transformation program as digital insurer in the presentation today. Modernizing our platforms will reduce complexity, will support product innovation and enable, importantly, personalized customer experience, and that's where insurance is going, personalized customer experiences. Our operational transformation centers around digitization, automation, partnering and the measured deployment of new generation AI capability. This will further enhance the customer experience. It will increase efficiency and improve our risk controls. And finally, the execution of any strategy relies on the quality skill and capability of the team. In addition to being purpose-led, customer focused and performance-driven, our people strategy will arm our team with the necessary skills to fully utilize the technology that we're talking about today and the operational improvements that we're making to the business to innovate and to solve complex customer problems. So to the agenda, which I said is aligned to that previous slide, Jeremy will start with providing an update on our financial settings and our approach to reinsurance and capital management. Our CRO, Bridget Messer, will then provide an overview of our changing risk profile and how our risk settings will enable our strategy before Adam covers our enabling programs to work in far greater detail. Have a short break then and Lisa -- following that Lisa, Michael and Jimmy will take you through the portfolio strategies across the 3 businesses. Now there'll be plenty of opportunities for Q&A before we farewell our online guests, while those here in the room, we'll rotate through 3 breakout sessions, which will showcase AI, the Digital Insurer program, and our climate modeling and disaster management capabilities. So without further ado, let me hand over to Jeremy.

All right. Thanks very much, Steve, and good morning, everyone. It's really great to be back with you all again following my absence from the full year results, and what a great job Steve did of stepping back into the CFO role again. So thanks, Steve. So I'd like to start today with our overarching investment proposition for you, our investors. Now I've mapped out on the slide here, the key elements of this proposition, and I'd like to emphasize a couple of key points. Firstly, Suncorp is a growing business, and the team are going to talk you through their growth aspirations for each of our portfolio shortly. And of course, this is importantly backed up by our recent growth experience. Secondly, we deliver strong and resilient risk-adjusted returns, disciplined capital management and an optimized reinsurance program, and I'll cover each of these shortly. And then finally, we're a well-managed business, and Bridget will talk today about how we use our Risk frameworks to optimize our performance. But first up, I'd like to make a few comments on our historical performance and how we've delivered value for shareholders over recent times. Now a common metric in assessing general insurance value creation is the combination of growth in tangible book value per share plus dividends. And as you can see on the chart, Suncorp has delivered compound annual growth over the last 6 years, FY '18 to FY '24, of over 19%. This rate of growth has significantly outpaced our key peers, and we believe clearly demonstrates our strong track record in generating value for shareholders. Our disciplined approach to capital management has meant we've not been required to issue equity with a resultant dilution over that time period. And we have a consistent track record of paying organically generated dividends funded from the earnings in the year. So diving back to the proposition and diving a bit deeper into how we think about the strong and resilient risk-adjusted returns. The graph shows the returns on tangible equity return on tangible equity versus the standard deviation in those returns for Suncorp and our ASX peers over the last decade. Our fundamental target is to deliver a risk-adjusted return in the top quartile of the ASX200. This is reassessed annually, considering changes to our risk profile, including changes in reinsurance structures. This currently equates to a return on tangible equity target of 23% to 25%, an return on equity of around 10% and an underlying ITR range of 10% to 12%. We then attribute the overall target down to an underlying ITR target for each portfolio that aims to ensure that each portfolio generally achieves an ROTE in the target range. Now our return targets are based on a through-the-cycle view of profit and underlying ITR. And I'd like to remind you of the growing resilience we have very purposefully built into underlying ITR over the last few years. And all of this aimed at improving our confidence in delivering those return outcomes. We have a more robust natural hazard allowance, which has increased to $1.56 billion for FY '25, and I'll talk more about that shortly. We've seen less reliance on prior year reserve releases, reducing from 1.5% of NEP historically, now just to 0.4% in FY '25. And then finally and importantly, we've increased our investment in growth to what we consider to be a realistic sustainable level to support our future growth aspirations. Now on that last point, I note that all of the investment we're showcasing here today around the Digital Insurer and AI programs of work are allowed for in this level of investment. The investment does not come at the short-term expense of our margins and shareholder returns. The significant financial benefits that these programs will deliver including expense and claims efficiencies, are expected to drive improved business growth as well as adding further resilience to our margins. The investment in the Digital Insurer Policy Transformation program is expected to be around $560 million with over 90% of the spend to occur by the end of FY '27. Of the spend, just under 50% is expected to be capitalized and amortized over 7 years. I note the future depreciation is allowed for in our margin outlook and the CapEx is allowed for in our capital management and dividend settings. Lisa and the team will talk you through why we see this as such a critical investment for our business and expand on the benefits we expect it to bring. Turning then to capital management. Our dividend payout range will remain at 60% to 80% of cash earnings with a target payout at the midpoint at 70%. Now this has been based on analysis of a through-the-cycle sustainable and consistent payout ratio as well as the expected franking outlook for the business going forward. This level of dividend would ordinarily be expected to result in net organic capital generation with approximately 20% of cash earnings expected to cover business growth. And so to ensure that we maintain an efficient capital base we plan to introduce an active on-market buyback facility that will allow us to periodically return capital in excess of the needs of the business. The proceeds from the sale of the New Zealand Life business subject to RBNZ approval, will also help seed the initial buyback facility. The New Zealand Life sale is expected to deliver net proceeds of $270 million. Of this, $125 million is expected to be available on completion in early calendar year '25 and then the balance is expected to be available once the deferred consideration is being completed in the second half of calendar year '26. So as announced at the FY '24 results, the CET1 capital target range is now between 1.025x and 1.325x PCA. This sees a net reduction in CET1 of around $245 million with an equivalent increase in Tier 2 capital requirements as we've been able to recognize more of the diversification benefit of the New Zealand business. Now we expect to operate in the top half of this range. Historically, Suncorp has adopted a prudent approach to managing capital, which has served us well, and we'll retain this setting going forward. we believe a modest amount of capital to buffer for the unexpected is appropriate and of value. I'll now briefly touch on the impact of the bank sale on hybrid capital, which I know is of interest to many. Post the bank sale, there remains $1.15 billion of hybrid capital issued by the group. This was originally to fund the capital needs of the bank that has since been repaid by ANZ, i.e., we retain the external note liabilities, but we've got an offsetting investment portfolio funded by the proceeds received from ANZ. So of that amount, $635 million will be utilized by the General Insurance business for 2 purposes: Firstly, around $390 million to support our recent growth as well as future growth. The net incremental funding cost of this is not material, being the differential between the cost of funding and the higher earnings on capital invested. And then we'll see about $245 million to fund the additional Tier 2 requirements from the lowest CET1 and improved leverage that I just mentioned. This then leaves $510 million of bank capital, which is effectively stranded until this capital is utilized or redeemed, which is expected to take place over the next 2 years. Now the P&L impact for this is also not material at about $5 million per annum and has already been allowed for in the net proceeds calculation, as we've previously communicated. So lastly, for me, I'd like to just finish up with some comments on natural hazards and reinsurance. And this is obviously a very topical area given current market dynamics and recent program changes announced by a domestic peer. I'd just like to start with recapping the features of our FY '25 program as context, and you can see on the slide. We have a very comprehensive program in place that provides vertical and horizontal protection, including specific covers for the New Zealand business. We believe it gives a good balance between managing volatility and capital requirements at the same time as retaining profitable exposures. Now I'll come back to our reinsurance philosophy shortly. On the markets. Pleasingly, reinsurance market pricing appears to be coming off recent peaks. But of course, FY '26 pricing will be influenced by experience over the remainder of the year, both locally and internationally. The recent hurricanes we've seen in the U.S. and flooding in Spain, whilst large and real human tragedies are not expected to have a material impact on pricing. The other important context in this space is our approach to setting our natural has allowance. Over the past 5 years, as you can see on the chart, our natural hazard allowance has been exceeded by an average of just $27 million per annum. Now I say just because importantly, this is in the context of 3 la Nina years over that period, which have historically resulted in higher natural hazard experience than either neutral or El Nino years. You can see over the same period, competitors have more significantly exceeded their allowance. Now we believe this is indicative of the relative prudence in our approach and assumptions and of our modeling capability which the team will showcase later on today. Now I wouldn't ordinarily put this much focus on a direct comparison with a peer. But given the high level of interest in reinsurance, I thought it would be useful to try and provide some points of comparison. Whilst our peers program helps to protect against natural hazard volatility, our program also provides good levels of protection. The programs will respond differently under different conditions. The peer program will perform under scenarios of an unusually high number of events whereas our program performs under scenarios of smaller numbers of larger losses. So you can see in the chart, we've compared our retained natural hazard costs over the past 10 years, under 2 what we call overlaid scenarios. The first is overlaying for our current FY '25 reinsurance program on the business back over those 10 years. And then the second is overlaying the peer FY '25 reinsurance program also back over those 10 years, but on the Suncorp portfolio. What this analysis quite clearly indicates is that in most years, there's no material difference in the retained natural hazard cost between the 2 programs. There are, however, a few exceptions. With FY '15 and FY '17 favoring our drop-down program when there were a small number of large events. And then in FY '22, where there was a significant number of events, those favored the peer program. But of course, I note to achieve that outcome is expected to be a significantly higher ceding of premiums to reinsurers. Now this is not to say that we won't explore these sorts of covers for Suncorp. We will, and I'll cover that next. But the timing of consideration of this has been important for us, taking into account the state of reinsurance markets following a number of years of significant price hardening, which is particularly important when looking at multiyear covers. The political landscape regarding natural hazard insurance, as evidenced by the affordability findings in the recent parliamentary inquiry report. And then finally, for us, the need to ensure completion of the bank sale. So then to finish up. And in keeping with our disciplined approach to managing the business, I'd now like to outline our thinking on reinsurance. Our philosophy has 3 key components. Firstly, we use reinsurance to optimize return on equity. If we can leverage a reinsurer's balance sheet more effectively than our own, be it through diversification, cost of capital arbitrage, other factors, we will do so. Secondly, we have an iron residual volatility. We know there is intrinsic value in managing this for our shareholders. Our various drop-downs and buy downs as well as previous aggregate covers are examples of this. And then finally, we also have a view on the sustainability of the program, both of us as a counterparty and of the reinsurer and the sustainability of the cover provided. So with these objectives in mind, we've set up a comprehensive program to do a full market scan of all reinsurance opportunities available to us. We have a very clear and disciplined framework with which to assess these opportunities. Firstly, a clear view on optimized return on equity and the risk/return trade-off curve as we cede or retain more risk, and I've taken you through that earlier in my presentation. This model informs on our assessment of long-term shareholder value creation including any potential for re-rate. Secondly, as I said before, we consider the sustainability of any cover, which means it should continue to be available for the foreseeable future, including on renewal at the end of any fixed term. And then thirdly, we consider our model risk and the protection reinsurance provides against unexpected changes in experience. Now whilst we are absolutely mindful of the benefit of reduced volatility, it's important that our reinsurance arrangements to create long-term shareholder value, i.e., they need to work, and they need to make sense. And should this not be the case, we remain comfortable with our capability as an insurer of risk. So as I said, we're in the process of systematically exploring opportunities and expect to update the market along with our FY '26 program renewal. And on that, I'll now hand over to Bridget.

Thanks, Jeremy, and good morning, everyone. My name is Bridget Messer, and I've had the pleasure of being CRO at Suncorp for 3 years. Before that, I worked in financial markets in London for a very long time, most recently as Chief Commercial Officer of a FTSE listed derivatives trading company. Now I know the CRO doesn't always get a guernsey at events like this, so I'm delighted to be here today sharing how our risk settings enable our strategy and our purpose. At its core, insurance is all about managing risk. And following the sale of Suncorp Bank, we are now able to focus on the risk needs of our business as a pure-play insurer. So let's take a look at how our risk profile changes post the sale of the bank. Overall, the sale of the bank has been positive for our risk profile. Now this by no means diminishes the importance of our risk focus and nor will it lead to any complacency, but post the sale, our risk exposure essentially gets smaller. For example, operational risk and reg risk reduces. A clear example of this is AML and CTF risk, which is primarily related to the bank. Financial risk reduces overall with no bank balance sheet, treasury, bank liquidity or lending credit. Insurance risk increases in relevance, and this is a tailwind because we have a clear proven track record here. Our digital insurer program will reduce the product complexity and manual processing risk over the long term, which improves our operational risk profile. In the short term, execution risk is elevated, given the size of the program, but again, we have a strong track record on execution risk, most recently illustrated by our ability to both deliver strong FY '24 results, while also delivering on the bank sale, including all the complexities of separation. And finally, our operational risk increases, while we provide transitional services to ANZ, but to mitigate this, we've created a TSA office in Adam's function to give clear accountability for TSA delivery, and we also have a good insurance program in place to support TSA delivery and transfer some of the TSA related risks. Of course, that's only half the picture. We have to consider our risk profile within the broader context of our operating environment, and that is what we're showing on the right-hand side of the slide. So let me take you through these 8 macro risk trends. The first trend we see is end-to-end focus technology and AI. This presents both a risk and an opportunity to our customer value propositions, our profitability, the workforce and our relationship with our customers. And speaking of customers, we also see trends on changes in consumer behavior and customer affordability issues. Customers' expectations around products and services and also their expectations on the role that corporates play in communities is changing. As Steve in his opening spoke to the significant focus we're putting on customer affordability. We see a trend on regulatory and government intervention across sectors, and we're structurally set up to respond, having recently joined our risk, compliance, government, regulatory and customer advocate teams together into the second line. This ensures we're preempting and responding to government and regulator views. The fifth trend we see is climate change and risk mitigation, which you'll hear much about today. Suncorp is a dedicated advocate for resilience in our communities. We work hard to drive this from within our business, whilst also encouraging governments to acknowledge the role that planning plays in mitigating the impacts of severe weather. Finishing off the last 3 trends, we have geopolitical, where be apply a broad lens to consider impacts on financial markets, supply chains and trade. We have evolving workforce and workspaces, where we are proactively preparing our people for a digital-first business and reshaping our employee value proposition to make sure we can attract and retain the very best talent. And of course, we have cyber, which is what keeps most CROs, CIOs and CEOs up at night. Cyber threats continue to evolve in frequency and sophistication. We remain vigilant and well prepared with a focus on building our capability around response and recovery. Summing up, we continuously monitor strategic and emerging risks. This then feeds into our discussions with the Board, which results in specific responses in our annual business plans. You'll hear more today about many of these activities, which equip us well to respond to these macro risk trends. Turning to our risk systems, which help us respond to this complex and dynamic environment. Suncorp has a long and demonstrated history of effective, mature and well-embedded risk management. I attribute the success to 4 key principles. Number one, our risk appetite is sophisticated, but also pragmatic supporting good risk decision-making and enabling innovation. Number two, we have a strong risk machine underpinned by our well-tested enterprise risk management framework. Number three, our people are risk aware. And number four, our business strategy and our risk strategy are intrinsically linked, with a focus on future risks and macro risk trends. So let me explain what I mean by all of this in a little bit more detail. First, our approach to risk appetite. Our multi-brand strategy allows for multiple underwriting risk appetites to tailor for different customer needs and targeted customer value propositions. A great example of this is our Shannon's risk appetite for classic cars. We have a strong control of our distribution channels to allow for better risk selection across multiple brands, and we have limited exposure to underwriting agencies. We have a track record on underwriting foresight. For example, for Silica exposed businesses, we have had a formal underwriting guideline in place since November 2018. And for worker-to-worker business, we were the first to move with comprehensive underwriting guideline in 2012. Now we're by no means immune or complacent to Silica or worker-to-worker claims, but our actuarial evaluations have shown this approach has been successful in responding to risk. Secondly, we have a robust operational risk management systems. As a large trans-Tasman insurer, we have millions of customers, multi-brands, multi-regulators, and like many large FS companies, more manual processes than we would like. This produces a complex operational risk environment. Our Enterprise Risk Management Framework is geared to respond to and manage this risk. Our first, second and third lines of defense are efficient and well-resourced with a clear delineation of responsibilities. Risk management is central to the scorecards of all of our people and risk capability is key to our overall capability strategy. We have matured our approach to addressing our highest rated risk significantly reducing our severe-rated risks in the last 3 years. And we invest heavily in data-enabled risk management using AI tools and dashboards to give enterprise-wide access to risk data. And 15% of my CRO team is dedicated to Risk Data and Analytics. Thirdly, we have risk-aware people. We place a large value on doing the right thing. And in fact, it's one of our core values and forms the bedrock of our risk culture. We seek partners and suppliers who share this value to help ensure our whole ecosystem is risk-aware and values oriented. We also have a strong culture of accountability, which is driven in part through our early adoption of BEAR because of our ownership of the bank. We're embedding a culture of 'safe to try' providing our people with sand box practices and practical risk guardrails that support innovation and experimentation. And most importantly, we're purpose-led. And it is our purpose that functions as a encompass when making risk/reward trade-offs. Finally, number four, we proactively respond to future trends and risks. Despite its long proud history, Suncorp is a business about the future. We use data to predict the future needs of our customers and our business and our future risk profile. Some examples of this include our science-based climate modeling and disaster management capability, which you'll see in one of our breakouts shortly. Our AI risk management approach, which has allowed us to ingest AI safely, at scale and at speed again, to be shown in our breakouts and our Customer Advocate Office, which was an industry first in 2017. Hopefully, this helps to bring to life for you how our risk profile changes now that we're a stand-alone insurer and how we are using our risk settings to support predictable performance, growth and long-term sustainability of Suncorp's business. If I can leave you with 3 messages, it's this. A business that is purpose-led will, by its nature, also be a risk-aware business. We have an active, mature enterprise-wide approach to managing risk. And while we're not immune from risk issues, our track record is strong, and most importantly, we are not complacent. I'll now hand over to Adam to speak to our strategic enablers.

Thanks, Bridget, and good morning, everyone. As Steven mentioned in his opening comments, our strategic enablers underpin our ambition across all our portfolios in Australia and New Zealand, being platform modernization and AI-enabled operational transformation. We believe these enablers will collectively drive considerable value for all our stakeholders. They'll deliver innovative and affordable customer propositions, simplify and streamline our operations and importantly, enable our workforce. In my session, I'll provide an overview of our approach and our execution priorities to delivering these enablers. And then as you've heard in our breakout sessions for those here in the room, we'll deep dive further into the Digital Insurer program, which is our cornerstone platform modernization investment and will also showcase some of our recent GenAI use cases that we've scaled out in both customer service and claims. Now it's important to recognize that Suncorp has a strong track record of driving shareholder value and customer benefits from technology-enabled transformation programs. Doing this consistently over a long period of time and taking a holistic business-led approach, we believe, positions us well for the next horizon of our key strategic investments. We can think of our technology and transformation evolution over the past decade or so in 3 waves, starting right back with the Legacy Simplification program that followed several acquisitions in the insurance business including Promina. Through this multiyear program, we rationalized our core insurance systems down to a single claims platform and a small number of policy administration systems. And the success of this program has underpinned our strong operating leverage across all our portfolios and our expense ratio over this time. Between FY '17 and '20, we delivered new digital and customer engagement platforms, including our mobile apps, for example. And additionally, we've scaled out some traditional data science, machine learning and automation solutions. And in more recent times, we've accelerated our digitization and our automation journey, shifted most of our workloads to public cloud, while also implementing several foundational technology platforms. As Bridget mentioned, it's also important to recognize the recent transition of Suncorp Bank to ANZ, which involved a significant and highly complex technology program of work that having now been successfully completed materially simplifies our technology estate. So if we look back over the last 4 years in a bit more detail, we've laid several foundations and reformed our end-to-end technology landscape. Some proof points include, in our customer channels, we've expanded the functionality, security and user experience of our sales, service and claims digital assets. Across our core platforms, our Customer and Pricing Ecosystem, also known as CaPE, has delivered a modern AI-enabled pricing engine and having integrated this pricing engine with expanded live data sets, we've enabled more targeted pricing, underwriting and risk selection for our home and motor portfolios. As Michael will cover, the launch of a new commercial platform has enabled more seamless broker connectivity and automated pricing and risk selection for our SME customers. We've shifted all of our data assets to a cloud-hosted data warehouse as well as implemented a new customer master platform that enables a single view of customer for operational, analytical and marketing purposes. As I mentioned, through the Suncorp Bank transition, we materially simplified our application and data architecture, separating our banking and insurance digital assets, customer systems, data warehouses and downstream marketing systems. And finally, in our enabling technology layer, we have shifted almost entirely from traditional owned and leased data centers to now having well over 90% of all of our technology workloads hosted in public cloud. This is industry-leading and provides us with scalable capacity, improved reliability better cost transparency and importantly, faster change delivery. Our broader change delivery approach has also matured significantly over this period, characterized by strong cross-functional collaboration between our technical and all of our business teams. We've scaled out industry-proven agile methodologies and ways of working across the enterprise with over 3,500 people working in this consistent delivery model, which has increased our delivery velocity and efficiency. So having completed a lot of this important foundational work, our platform modernization agenda is now accelerating at pace. We've defined a clearly sequence tech road map over the next 3 to 5 years that will progressively deliver our insurance platforms of the future. As an organization, we concluded decisively that we had extracted all we could from our core policy administration system known as Protect. This acknowledges the constraints in supporting new product innovation, and the technical complexity that's being built around this PAS. There were 3 clear options that we carefully evaluated over an extended period, continuing to hollow out and extract more life out of our legacy PAS, implementing a stand-alone green field system that would support only new product innovation or migrating our existing portfolios onto a cloud-first modern policy platform. Through extensive management assessment, engagement with many external parties and, of course, consultation with the Board, we landed on the third option as the most optimal for Suncorp. This option enables us to radically simplify our existing products, processes and internal operations while also supporting future product innovation and potential new distribution partnerships in the future. As Steve has mentioned, in the past year or so, we've mobilized the Digital Insurer policy transformation program or digital insurer for short, which is the centerpiece of our platform modernization agenda. The tagline for our Digital Insurer program is "simplify to grow". We've defined what we call our North Star success metrics to guide the outcomes that we're seeking to achieve on this important program. These include creating 100% digitally enabled products. We're striving to create end-to-end digitization, not purely what you might describe as a digital wrapper at the front end. We're committed to a single set of modular product coverages and targeting 90-plus percent reuse of those product coverages within different product lines. We want our business processes to be as common as possible across all of our brands and products and of course, always striving to deliver better propositions and experiences for our customers. Through this program, we're delivering our target state technology ecosystem in the policy domain, which we believe is differentiated by adopting industry-leading Software-as-a-Service or SaaS solutions. Through a rigorous RFP process, we selected Duck Creek on Demand as our new target state policy platform. You may be aware, Duck Creek is a leading provider of core insurance solutions and supports many of the largest global insurance companies. But importantly, there are more than 10 Australian and New Zealand implementations of Duck Creek, which have been completed or are underway. The scope of the program includes more than the PAS. It also includes uplift and integration across our tech stack, including a modernized digital experience platform, integration with CaPE for pricing, a new customer correspondence platform and further uplift to our data and insights platforms. We are already well progressed in execution of the early phases of this program. Now as Bridget reflected a program of this scale is clearly a significant undertaking with inherent execution risk. We're very alive to these risks and to mitigate them, we've assigned dedicated business and technical leadership some of the strongest executives across our teams. We're supported by both Duck Creek delivery resources and also a strategic systems integration partner. In addition, we've embedded strong governance structures as well as rigorous internal and external assurance and oversight up to the Board. And while this is expected to be a multiyear program, the delivery plan is deliberately designed and sequenced to maximize early benefit realization. Product simplification and process redesign occurs right up front. The core tech foundations are then being built and integrated to support each portfolio ahead of progressive brand-specific releases. Migration of our existing policies to the new platform will occur at renewal to minimize any customer disruption. And you can see in the indicative flight plan on the right of this chart, we're starting with AA Insurance, our direct-to-consumer joint venture with the New Zealand Automobile Association. AA Insurance has already completed the simplification of its product suite making it an ideal first candidate to move to the new platform, and we're targeting to go live with AA insurance towards the back end of the second half of this financial year. AAMI is targeted to be our second release and marks the beginning of deployment to our mass consumer brands in Australia, where we see most of the benefits to be realized. And we then expect to extend the platform to other consumer brands as well as to our commercial and personal injury portfolios, noting the timing and sequencing for the releases in the later years are yet to be finalized. And whilst this is our cornerstone program in parallel to Digital Insurer, we have several related and complementary platform modernization programs underway, supporting our portfolios in Australia and New Zealand. We're upgrading to a new cloud-based contact center platform, which will further improve customer experiences and importantly, integrate AI capabilities into our assisted customer service channel. Jimmy will cover more that we're extending our CaPE pricing solution to uplift pricing and underwriting for our New Zealand intermediated portfolios. We're implementing a new Human Capital Management platform and a payroll managed service and through this program will simplify business processes and rationalize systems across the end-to-end employee life cycle. We're delivering a consolidated financial management platform, which will streamline our finance processes. And in addition, we're introducing a new modern reinsurance management platform also from Duck Creek. And finally, we plan to commence exploration of upgrading our claims platform to a next-generation solution that will further streamline our end-to-end claims processes and integration within our supply chain that we'll look to at the back end of this plan period. So moving beyond our platform modernization agenda, we've also been delivering a multiyear Operational Transformation agenda. And Steve discussed this previously, it has 4 key pillars. Digitization. We've reimagined our digital customer experiences and have increased digital sales now to 75% and service to 48% over the past 4 years in our consumer business. Digital claims lodgment across Motor and Home has increased from 20% to now close to 50%. And during natural hazard events or following them, that can be as much as 70% or more. Through our historical automation and AI investments, we have 470 robots deployed, which last financial year, automated around 30 million transactions and also enabled more than 2 million chatbot conversations in our digital channels. We already have over 100 more traditional AI and machine learning models in production across the end-to-end value chain supporting customer sales and service, pricing and underwriting, fraud detection and claims management. We have well-established relationships with globally recognized IT and business process outsource partners, most of which have been in place for well over a decade. This provides us with flexible workforce capacity and efficiencies, and we're increasingly leveraging these partners to support our technology and AI transformation programs. And finally, through our best-in-class claims program, we've leveraged our scale in the supply chain, streamlined our end-to-end claims processes and delivered market-leading event response through our Disaster Management Center that Alli will showcase in one of the breakouts. So next slide. And through the operational transformation program, we've seen an improvement in our total expense ratio from 23.1% to 19% -- 19.6% over the past 4 financial years. And while we'll continue to apply these 4 transformation levers, the next horizon will accelerate our adoption of artificial intelligence. We recognize that whilst there are significant opportunities from AI and particularly GenAI, we need to ensure that our approach recognizes the risks and rapidly evolving nature of these opportunities and we're carefully balancing the opportunities that AI represents with the need to operate within a clearly defined risk appetite. Our AI strategy can be characterized by 3 core principles: we're taking an enterprise-wide approach, both top-down but also we've galvanized all parts of the organization. And earlier this year, across all parts of the business, they self-identified well over 100 potential AI use cases. But we're pragmatically delivering these use cases where we can drive tangible benefits, looking at customer experience improvement, efficiencies but also improvement in our risk controls. And finally, we're encouraging an innovation mindset where we're testing and learning before we scale our capabilities more broadly. We've invested upfront in 3 foundational capabilities that support this AI transformation agenda. People, technology and risk management. Starting with people. Given the strategic importance of AI transformation, we've recently created a new role in my leadership team to orchestrate this end-to-end accountability, which Priyanka Paranagama is leading, who will also lead our AI showcase. And we're investing significantly in the education and capability building for all of our people with literally thousands of people across Suncorp participating in our AI and U learning series, AI hackathons and more formalized training and reskill programs. In terms of technology, we've built scalable tech foundations including a strategic AI platform that we call SunGPT, which orchestrates and securely connects our proprietary data assets with market-leading large language models like OpenAI. We're deploying our AI use cases through 3 different modes: 1. Discrete AI utilities, think Microsoft copilot; 2. Embedding AI through our core SaaS platforms; 3 as well as what we call Intelligent Process automation, which integrates targeted AI use cases into our business processes and systems. And then thirdly and importantly, our risk capabilities, which Bridget touched on. We've worked very collaboratively with Bridget's team to develop a specific board-approved risk appetite for AI. We've embedded a data ethics framework to ensure our responsible use of AI and also adopted a tailored AI-specific risk and control library. And finally, we're actively and consistently governing our AI adoption across all parts of the business. We're striving to achieve what we call "Pace with prudence", embedding strong central coordination and oversight. So we see opportunities to apply AI across the entire insurance value chain. As you'd all know, insurance is a very data-intensive business and particularly vast amounts of unstructured data in many forms. And that absolutely lends itself to applying AI and specifically GenAI to drive improvements. We've prioritized lower-risk GenAI use cases in FY '25, which are internally facing to augment our people with plans to graduate to more externally facing GenAI deployments in later years as the technology and the capabilities mature. But we would see over time to deploy more customer-facing AI agents. Our FY '25 AI portfolio has around 20 use cases deployed or under development, but this is clearly just the beginning of delivering the full potential of this transformative and rapidly evolving technology. Two recent examples that we'll showcase in the breakouts is single view of claims, which supports our claims advisers by summarizing and generating contextualized claims information and smart knowledge, our frontline knowledge assistant. So in closing, we believe that the combination of these enablers will create competitive differentiation for Suncorp and deliver tangible financial and nonfinancial benefits that will be incrementally realized. Key benefit drivers include more personalized products and services, such as pay as you drive motor insurance and new innovative propositions focused on both prevention and protection. Faster speed to market from simplified product, processes and technology. Our workforce will be higher skilled and enabled by AI systems and tools will deliver more robust and automated preventative controls. And finally, we expect financial benefits in terms of cost efficiencies, cost avoidance, margin resilience and growth. So in closing, Suncorp has a proven track record of delivering tech-enabled transformation. We've implemented the core foundations to support the next horizon of our platform modernization and our complementary AI transformation agenda. And we have a prioritized and well-governed delivery road map and execution is already well underway. So we'll close there with the first part of the session. We'll take a 10-minute break and then after the break, we'll hand it to Lisa, Michael and Jimmy, who will bring to life our portfolio strategies. Thank you. [Break]

Good morning, and welcome back. Earlier today, you've heard from the team about our plans as a stand-alone general insurer. It's clear we have a focused strategy and an important modernization agenda ahead of us. And a key component of this strategy is the consumer strategy, and I'll touch on 3 important areas. Firstly, a recap of the operating environment as important context for the strategy. Second, I'll talk to our strategic priorities and how we continue to leverage our competitive advantages. And thirdly, I'll take Adam's comments on Digital Insurer further and show how it can transform our business while delivering meaningful benefits. So let's begin with an overview. We're a scale business that provides home and motor insurance. We have strong market share and over 5 million customers and $7.5 billion in GWP. Our portfolio of brands has allowed us to grow profitably with higher policy count and margins that have been progressively restored towards target ranges despite industry-wide increases in input costs. We have a track record of modernizing the business. Our digitization agenda is well advanced. And for mass brands, we now deliver over 70% of sales and around 50% of service transactions digitally. And every month, we continue to roll out additional functionality for our customers and Digital Insurer will enable a further step change. Now to the operating environment, which remains complex and dynamic. But let me make a few call-outs. Competition is strong and there is good choice for our customers, as evidenced by strong levels of customer shopping. Our growth demonstrates the strength of our offering. Affordability remains a very real challenge for our customers. Recent natural hazard experience and the hardening of the reinsurance market in home have driven industry underwriting losses. With input costs still elevated, the industry continues to focus on margin restoration. In motor, claims inflation has begun to moderate and customers are beginning to see this reflected in their premiums. In the consumer market, the pace of technological change remains high. Consumers' preference is to interact digitally. And of course, there are new opportunities emerging with things like Gen AI. And finally, there's a high level of focus on the industry from regulators, governments and community. We welcome these reviews as we expect better outcomes for customers across the community. The second important area I want to highlight is our strategy reflects the realities of the environment and our key competitive advantages, scale, our brands, data including pricing and claims management. And the strategy has 5 clear strategic priorities as called out on this slide. Firstly, customer distribution and innovation. This is where we leverage our brand strength and reach to drive growth and customer engagement. The Digital Insurer program will reduce the complexity of delivering our multi-brand strategy while empowering our people to have better conversations with customers with fewer and simpler systems to navigate. Secondly, leading protection and prevention solutions. This is underpinned by competitive advantage in data, especially in pricing and reselection and we'll extend this capability into prevention solutions. The rollout of Digital Insurer will further unlock innovation, allowing us to deliver more insurance solutions to customers at a faster pace and lower cost. Thirdly, digital first customer experiences. We already have amongst the highest rates of digitalization in Australia. And Digital Insurer will ensure further step change in how we interact with covering customers and importantly, align our offerings across all of our brands, both mass and niche brands. Importantly, industry leadership in claims, where we continue to invest in our capability to respond quickly in the moments that matter. Our claim strategy leverages both our scale, our supply chain, data advantages and builds on the significant progress we've made in this area. And finally, a leading voice on advocacy with continued focus on risk prevention and improving affordability and availability outcomes for customers. By delivering against these 5 clear strategic priorities, we will drive significant improvements in customer NPS and achieve our ambition of #1 market share position consistently delivered within margin target ranges. To reiterate the point I've made earlier in leveraging our competitive advantage, our brands are a key differentiator. So I'll spend more time talking through our brands in detail. Our 8 consumer brands range from AAMI, our national brand, state-based heroes like Suncorp and GIO and market-leading niche brands such as Shannons, CIL and Terri Scheer. Over 60% of Australians already consider our brands in the top 2 choices in insurance and AAMI is the most considered insurance brand nationally. The portfolio enables a granular approach to customer segmentation and to develop propositions that meet a broad range of customer needs, both are essential ingredients for growth. Our brands also attract a diverse demographic. For example, 76% of Bingle's customer base are aged under 50, and GIO, whereas they have 60% of its customer base aged over 50. We can position our brands to make diverse needs of a variety of customers while differentiating from our competitors, including by tailoring the experience at the brands offer. Shannons, for example, focuses on motor enthusiasts, and we do this by developing relevant products and offering experiences that customers value. Since the start of this year, we've hosted 32 events in our Shannons showrooms and attracted over 13,000 attendees and also the brand has attended over 1,000 community events. And the modular nature of Digital Insurer will enable us to further differentiate our brand offerings by bundling product features most suitable to a brand and a customer base. It will also enable us to respond to changing customer needs at a significantly faster pace and at a lower cost. At Suncorp, our competitive advantage in data has been built over many years, and we are continually enhancing it. You'll remember that CaPE, a single pricing engine across our mass brands, went live in early 2022. Our sophisticated pricing capability allows us to assess risk at an individual property level. We can appropriately price and improve our risk mix by growing in locations where the natural hazard risk is lower. And this shift is underway. We see this in strike rates for the low natural hazardous segment, which are higher than the high-risk segment by 13 percentage points. In addition to delivering leading protection solutions, we will leverage our data capability and Digital Insurer to develop new prevention solutions to customers. The last couple of years have highlighted that we can do more to mitigate risk in both customers' homes and whilst they're in the car. And already, we have proof points that we will extend in scope and scale over time. In February this year, we launched MyHome by the Suncorp Insurance app, to educate homeowners on maintenance habits that build everyday home resilience. The app includes a reminder feature so customers can keep track of maintenance requirements around the home. And in motor, we launched the AAMI Driver rewards app, and customers have now shared over 300 million kilometers of driving data. Now this data is important. It tells us that driving improves after using the app, resulting in few accidents. And in FY '25, we'll add customer tips and prompts that would further help prevent accidents and claims. Now you would have heard me talk about Digital Insurer throughout the presentation. This is because of the impact we expected to make across the business, allowing us to unlock capability and benefits in each of our strategic priorities. So I'll now focus on how the program will enhance the delivery of digital experiences. Building a digital first solution will enable seamless end-to-end digital experiences. Currently, our digital customer layer needs to interact with complex legacy systems, and this limits our capability and increases the cost and hampers the speed of deploying change. So let me give you a recent example in our current ecosystem. A small change in the fault in a default excess update took approximately $1 million to execute and 6 months. Adam touched on the mechanics of the system, and one of the benefits of the modular build will be the control it gives customers in tailoring products to suit their needs, all in a digital environment. It will also enable us to add features quickly and at a significantly lower cost and make them available across the suite of brands. For example, with Digital Insurer, we'll be able to build a bespoke electric vehicle product launched to market in weeks, not months. We will also be able to personalize customer experiences such as recommending to customers real-time personalized next best actions or the ability to bundle products at quote and at renewal. And Digital Insurer will not only revolutionize digital interactions. Importantly, we'll approve the conversations that people have over the phone because they're using simpler, modern systems and fewer systems. And we expect Digital Insurer to deliver benefits across Suncorp, in consumer, in commercial, in personal injury and New Zealand. And once implemented, it will drive margin resilience and transform the business to unlock growth, and the program benefits are contained within our margin guidance. And for those in the room, we've got a great showcase a little bit later for you on Digital Insurer. Importantly, our strategy continues to invest in claims to ensure industry leadership and being there for our customers in the moments that matter. Whilst our prevention efforts will reduce claims frequency and severity over time, we still need to be well positioned to respond when claims do arise. And the slide summarizes key initiatives across the Home and Motor claims journey. In Motor, we've respond to over 0.5 million claims each year, and we bring to the fore our benefits of scale, established supply chain, innovation and our experienced team. And our immediate focus is to enhance the customer experience, including expanding the footprint of our trusted partners to increase capacity, leveraging repair assessment technologies to enhance the digital claim experience and path claims to the right team and the right repairer. And I'll show an example of that in a moment and strengthening customer communications. In Home, we bring our established supply chain, digital solutions, innovation capability, including our new disaster management center and our experienced team to get our customers back in their home faster. The disaster management center is a manifestation of the technology we presented in the breakout at our last investor update. And the team will also give you an update on how we're progressing later today. Our areas of focus include further improving the customer experience, claim cycle times and cost while addressing the findings of various reviews. On this slide, we've highlighted where we're innovating in motor claims. This shows the guided image to capture technology, which will enable customers to capture the damage to their car on their smartphone. And we're partnering with Solera to shortly provide this functionality to customers, repairers and assessors and we'll be the first in Australia to do so. This will allow us to assess the damage more quickly, allocate cars more effectively into assessment and repair networks and benefits include reduced wait times for our customers and lower average claims cost. So let me now turn to the advocacy element of our strategy. And it was pleasing that key recommendations of the Parliamentary flood inquiry reflected our advocacy priorities, including the recommendation to remove state-based taxes. We seek to be the leading industry voice, and we'll continue to advocate with governments and policymakers for greater investment in disaster mitigation and resilience to extreme weather. And we continue to participate in industry and government partnerships with a focus on addressing insurance affordability and availability. For the Parliamentary flood inquiry specifically, many of the recommendations can be progressed by insurers immediately, and we are well advanced. Some will take more time and further consideration. However, let me give you some examples of actions already underway. We have improved resourcing with 150 more permanent home claims team members. We've added 5 mobile disaster response hubs and they're fit-for-purpose caravans, and they will be deployed in the event of severe weather, providing immediate face-to-face assistance to impacted communities. Our new disaster management center feature state-of-the-art technology to monitor and respond to extreme weather. Why this is important? It will allow us to respond faster and also help customers prepare before disaster strikes. We continue to make ongoing investment in self-service capability to enable greater digital lodgement and service. And our new Gen AI single view of claim functionality will enable better customer conversations and drive efficiency. So let me wrap up with a few key points about the consumer insurance business. We have a clear strategy that we'll deliver. While there are some challenges in the operating environment, our strategy leaves us well placed to respond. Our strategic priorities leverage our clear competitive advantages across the insurance value chain. And finally, as a Digital Insurer, our business will be transformed with tangible benefits for all of our stakeholders. So now let me hand you across to Michael Miller, who's doing great things in the commercial business.

Thank you, Lisa Harrison. Thank you for your very kind words, and hello to everyone here. Nice to see you. Just over 12 months ago, we combined Suncorp's commercial and compulsory third party businesses, including claims functions to form the commercial and personal injury business. The resulting end-to-end structure, improves accountability on the entire customer value chain, increases customer centricity and reflects the growing strategic importance of commercial and personal injury to Suncorp's strategy. After 1 year as the Chief Executive of this new business, I'm excited to stand here today and my first Investor Strategy Day to share how far we've come and the tremendous opportunity ahead of us. So as you can see from the slide, our commercial business is around $2 billion in premium split into 2 areas: tailored lines, which represents our traditional business and platforms. The creation of our platform business recognizes the growing importance of broker platforms to the commercial insurance landscape and a recognition that different skills needed to run this business compared to our traditional tailored lines business. We also have large compulsory third party and workers compensation portfolios, which are managed on a end-to-end basis, where we can already see greater collaboration between portfolio and claims teams. I'll cover the commercial business first and then I'll turn to our personal injury business. Firstly, the commercial market and the operating environment. In the commercial market, we are ranked #4 in market share with about 9% market share. The key themes when we look at this market are a broker market that continues to consolidate and is punctuated by merger and acquisition activity that hasn't abated, increasing prominence of underwriting agencies that have taken market share from the large insurance companies. Insurers have generally experienced good profitability in recent years. As a result, we see an increased interest in overseas capacity in the Australian market through supporting underwriting agencies and also deploying capital directly. Their margins remain in line with target. However, the above themes emphasize the need to double down on our competitive advantages in broker relationships, claims experience, differentiated customer experiences like our risk engineering capability. And most of all, and most importantly, disciplined underwriting in any market. Broker groups are also focused on providing technology solutions to their members, which is increasing the prevalence of broker platforms. This is allowing individual brokers to become more efficient and obtain multiple instant quotes for simple risks, such as business pack and also non-fleet motor. Strategic priorities. So when I started running commercial insurance at Suncorp, just over 3 years ago now, we're recovering from a challenging market period. where we have withdrawn from products and remediated portfolios. Investment in the commercial business was hampered for a number of years due to the necessary prioritization tradeoffs we had to make. This has now been clearly addressed with the decision to become a pure-play insurance company, and investments started to flow into commercial about 3 years ago. Lastly, like most insurance companies, COVID had impacted our focus on the external market and service standards were very low. Brokers and the customers were frustrated. I am pleased to say that has changed. Our strategic priorities are very clear. We have an ambition. And I will say it is an ambitious ambition, if I can say such a thing, to become #2 in the market by 2030. We believe that our natural share is around 12% to 13%, but our longer-term ambition is to grow more than that. That said, margin and return on equity targets are the most important measures, and therefore, disciplined underwriting is paramount as we adapt to market conditions that may occur. Broker relationships are absolutely key. 95% of the commercial business that we do is transacted through our broker partners. Vero has, for many years, worked closely with brokers and our brand has been synonymous with supporting the broker community, whether by our 35-year sponsorship of the NBA young broker program, 16 years of promoting risk management through the Risk Management Advancer awards or our clear tagline for Vero aimed at brokers, insurance with insight. Platform for growth. So people, technology and overall technical excellence in underwriting, claims, distribution are key areas of investment. We are focusing on programs of training for our insurance professionals to have a clear technical path for claims, underwriting and distribution. Technology is very important, as alluded to by Adam and also through Lisa's presentation. Our recent investment in SME underwriting and the upcoming investment in digital insurer will ensure we have the tools and capability to excel in the profession of commercial insurance. Risk appetite. We have a clear, well-documented risk appetite as articulated by our Chief Risk Officer, Bridget Messer. We do not, however, use all of the risk appetite today. As a result, we are looking to launch a new product in a series called Vero specialty lines, which has the ambition of creating smaller products that are closely adjacent to our current products. The first product to be launched will be high hazard property that is, businesses with more complex risk profiles rather than those exposed to higher natural hazard losses. It's around occupation, not geography. These are the risks that we write today but decline over 70% of opportunities due to the time it takes to underwrite these risks adequately. We will also look to have separate reinsurance treaties sitting behind these products to reduce volatility. Our ambition is to launch a series of these products over the next 3 years as we prove out performance. Our brands and segments. I quite like this slide because it sets up our business with the market. We have organized our commercial insurance business into 2 areas. As I said before, a platform business and a tailored lines business. We believe this serves the current market very well, but also reflects how we expect the market to evolve going forward. On the left-hand side, you'll see our platform business. It's focused on small businesses and simpler risks with automated underwriting and instantaneous decisions for both direct and broker customers. We have a small direct SME business that is very similar to our consumer business and uses the AAMI and GIO brands. This represents a future opportunity with strong brands and will become more attractive to consumers as technology evolves. In the short to medium term, however, the focus is very clearly on connectivity to broker platforms. Large broker groups are building platforms for their members to transact through for efficiency and also risk reasons. We believe that this trend will continue over time and the breadth of products that will be connected will increase with technology improvements. We also believe that the skills needed in the area -- in this area focus on technology, data, speed, and they are subtly different to the skills historically needed in commercial insurance. Getting the right people in this business is very important. On the right-hand side, you'll see our traditional business, we call it tailored lines. Tailored lines offer sophisticated underwriting and risk selection for more complex risks from mid-market customers to large corporates. Our competitive advantages in this space are broker relationships, our best-in-market underwriters, risk engineers and our differentiated and award-winning claims experience. We continue to see a market for specialized skills and products that will be demanded for by complex risks. Our Vero specialty lines is a good example where this part of the business can be expanded. Underwriting pricing, distribution and claims excellence. I'm proud to say that today, following investment and focus in the commercial business, we built strong foundations for growth, and we are well on the way to achieving our goals. You can see in this slide that we are growing the business at or above target margins over the last 2 years. Additionally, we have improving market broker NPS and are winning awards, something that myself and the team are very, very proud of. And in particular, middle graph, I like very much. Broker relationships and customer outcomes have been a significant focus over the last 3 years. Our aim is where a broker touches Vero or GIO, anywhere in Australia, Perth, Far North Queensland, the interaction is absolutely consistent. Our focus has been on listening to feedback, making changes to the business on a consistent basis as well as investment in the business via technology. The awards we are winning reinforce the strategic focus we have had on driving the commercial business forward. We also have opportunity to deliver more growth and benefit from the platform we have built. As I stated previously, we will launch Vero Specialty Lines after 10 years of not launching any new products off a very stable business platform. In conclusion, this slide shows a number of proof points of where Suncorp's commercial business is now. And the last slide on commercial around digitization, key theme. This slide illustrates the benefits that we're seeing from digitization. Brokers and their customers, just like our customers in consumer are demanding digital interactions with their insurers. In August 2022, we launched our new VeroEdge platform for SME packages and non-fleet motor products, providing brokers an instantaneous yes or no underwriting decision, and we have been -- have seen significant growth in new business across both products. We continue to refine the pricing and service levels of this new platform as we understand its potential better. We are progressively connecting this VeroEdge platform to more broker platforms. Our business-wide investment in the digital insurer program and artificial intelligence will deliver the next step change in our tech capability, providing better underwriting capability, broker connectivity, ability to launch new products and efficiency. It will also enable us to grow our direct proposition, which operates at an attractive margin. Now to personal injury. And this slide illustrates where we operate in Australia and where we don't. In personal injury, we hold a leading market share in both privately underwritten CTP and workers' compensation schemes across Australia. In CTP, we maintained leading market shares across all states, including more than 50% in Queensland following RACQ's market exit in October 2023. Market conditions remain stable, though we've discussed the sustainability challenges of the Queensland scheme in our FY '24 results, and this continues to be a challenge. As noted previously, we have been talking to the Queensland government and their departments constructively for a number of months on scheme reform. Unlike Queensland, compulsory third-party insurers in New South Wales are able to price for superimposed inflation and experience, with the TEPL operating as a shock absorber to ensure insured profits are neither excessive nor inadequate. While scheme participants, including Suncorp, have recently seen an uptick in frequency in New South Wales, we are able to factor this into our forward pricing. In workers' compensation, we also have a leading market share nationally, most notably in Western Australia, which is the largest privately underwritten workers' compensation scheme in Australia. We also operate in the ACT, Tasmania and the Northern Territory. We operate a fee-for-service claims proposition in New South Wales for the Icare managed workers' compensation scheme. We see opportunity to grow our claims-as-a-service proposition, both within New South Wales and more broadly. Finally, you will see that a significant part of compulsory third-party and workers' compensation schemes are underwritten by government balance sheets. This is an area where we are watching carefully for opportunity to assist with claims services and more broadly scheme privatization. If state governments decide to move their liabilities from their balance sheets to corporate balance sheets, we are ideally positioned. Personal injury strategic priorities. Our priorities here focus on: firstly, and most importantly, delivering better outcomes for injured parties by getting them back to life faster. Claims management is the most important operation to run well within our long-tail business. Workers' compensation and CTP schemes in Australia represent safety nets for Australians injured at work and on our roads and are core to our purpose of building futures and protecting what matters; advocating for policy changes to expand privatization opportunities across schemes and improve sustainability of schemes, particularly in Queensland; improving the efficiency and effectiveness of our claims service by investing in artificial intelligence and automation technologies; growing our claims-as-a-service offering across both government-regulated schemes and potentially self-insurance in the future; and increasing direct settlements with customers to improve return to life outcomes while also managing claims costs. There's a slide here on our direct claims in Queensland. And this slide illustrates the average customer journey when they settle a claim with us directly compared to a represented claim in Queensland compulsory third party. It clearly shows that customers are able to achieve better outcomes when settling claims directly with us rather than being legally represented. Direct claims are finalized faster and with less complexity. Our focus is on improving processes for direct settlement to make it easier for our customers and increasing trust so they have the confidence to do with us directly. Our priority is do the right thing and settle claims fairly and as quickly as possible. This is absolutely critical. We do recognize that some claims should have legal representation given their complexity. Our focus on direct claims is about improving customer experience in a time of need and giving choice to Australians injured on the road. And we do make a difference in personal injury, and that's very clear. And at the heart of our personal injury business is a commitment to making a meaningful difference in the lives of those we serve. We do this beyond just the products and services we provide our customers. We also play a leading role in community programs aimed at preventing -- prevention as well as treatment of injured Australians, including the Australian Road Safety Foundation, it Pays to Care and also the Personal Injury Education Foundation. I hope I've given you a better understanding of our commercial and personal injury businesses and the opportunities that lie ahead of us to continue growing profitably and to support Suncorp to become a leading trans-Tasman insurer. So thank you very much. So on that, I'll hand over to Jimmy Higgins, who's going to talk about our wonderful New Zealand business.

Well, thank you, Mike. Good morning. Welcome and really great to be here in Sydney. And as the final speaker of the formal presentations today, and before we move into question time, I want to take you through the New Zealand business, its market positioning, its brands, competitive advantages, strategic priorities. And you will see the strong alignment not only across the Australian and New Zealand businesses, but also the opportunities to drive greater growth and synergies across our operating networks. Now in New Zealand, Suncorp New Zealand provides a broad spectrum of general insurance and specialty products. Consumer products being largely distributed through AA Insurance and corporate partners and commercial and specialty products being distributed through Vero and Vero liability. The distribution of these products is achieved through both direct and intermediated business models. The intermediate business is Vero, which represents around 67% of the Suncorp New Zealand premium pool, and it distributes products through brokers and corporate partners. The brokers are very similar to Michael's business here in Australia, being Steadfast, AoN, Gallagher, AUB, which is NZB in New Zealand, but also a number of independent smaller brokers spread across metro and regional New Zealand. Our main corporate partners is the ANZ Bank, the largest provider of mortgages in New Zealand and Turners, which is the largest motor dealership in New Zealand. Now those Vero liability, it's a specialty underwriter of liability products and include general liability, D&O covers, professional indemnity and has got a cyber product. It offers the complete end-to-end underwriting and claims services that are tailored to New Zealand businesses, and it delivers consistently stable earnings and is not exposed to natural hazard risks. Now the direct business is AA Insurance, which represents around 33% of the Suncorp New Zealand premium pool. AA is a well-recognized and respected business that is governed through a joint venture, which is owned 68% by Suncorp and 32% by the AA Motoring Club. Motor insurance makes up around 60% of its portfolio with home and contents making up the balance. Now in terms of defining the competitive advantages in the New Zealand market, AA Insurance has a very strong brand presence and is rated New Zealand's most trusted general insurer and is consistently in the top 10 New Zealand corporate reputation. It has leading personal lines propositions and is consistently achieving high NPS scores. It can leverage the extended reach of the 2 million members of the AA Motoring Club, and it is the fastest-growing large general insurer in New Zealand with growth last year of 23%. Now Vero insurance can access the full vertical of insurance buyers in New Zealand from consumer to mid-market through to large government accounts. It provides an extensive suite of products and solutions to customers with offerings from personal lines and commercial products to specialty and liability products. In the commercial product suite, it includes corporate, which are asset values above $100 million; Marine, which covers Hull and cargo and a bit of pleasure craft, construction and engineering; commercial motor vehicle, which includes the fleet business and business insurance, which covers material damage and business interruption and rural products. And we've also demonstrated capabilities and strategic partnerships, supporting one of our corporate partners to build and employ a digital co-to-buying experience through their platform and for their customers. And over the years, we've developed a strong reputation for claims management, particularly around natural hazards. Following the Canopy earthquake events in 2010, '11, we advocated for and led the industry changes in how EQC and the insurance industry manage natural hazards going forward. Turning to our operating environment, the New Zealand general insurance market structure is around $11 billion, and it's grown by around 15% over the last 2 years. The market is different from Australia in that it is 65% intermediated and 35% direct. About 90% of commercial products are distributed through intermediated channels and around 35% of personal line products are distributed through intermediated channels. Now in terms of recent trends, the New Zealand insurance industry continues to experience structural change, prompted by the North Island events of last year and the subsequent reinsurance resetting of risk appetite for New Zealand. However, New Zealanders or New Zealand insurers have been repricing, rebuilding their operational resilience with returns beginning to stabilize in FY '24. Now in Suncorp New Zealand, we have taken just 18 months to restore margins to target performance, which is similar to previous experiences that we've had following major earthquakes in New Zealand. Politically, the new government is supportive of business and willing to engage. They are cognizant of the impacts of the '23 weather events have had on the New Zealand economy as well as the broader communities. And I've been working proactively with the insurance industry to better understand insurance, reinsurance and the importance of reinsurance capacity for New Zealand. The current government is also developing a national adaptation framework that will guide how New Zealand adapts to the effects of climate change. In October this year, the Finance and Expenditure Committee released its Climate Adaptation Inquiry Report, which included a number of recommendations that aim to achieve an orderly transition of measures that minimize long-term costs of climate change impacts. And in terms of the New Zealand regulatory environment, it remains very active with a number of legislation and regulatory guidelines being released over the next 2 years. Now we have a history of delivering growth in New Zealand. Suncorp New Zealand grew 17% over FY '24, gaining market share over the last 3 years. And over the last 5 years, it has achieved average growth of 13.7%. Over the '23 to '24 period, our growth has largely been driven by the significant pricing increases that were industry-wide in New Zealand, but we also achieved customer growth through this period as well. But we need to simplify our business. And as we appeared earlier, our customers face affordability challenges with the need to ensure pricing is not the only lever to deliver the required margins. We must simplify and digitize our business to reduce costs, continue to improve customer experiences and improve our risk selection to ensure we achieve the right balance of exposures to low, medium and high-risk properties. Now we have made steady progress in these priorities over the last 12 months. We have been simplifying our products and processes, particularly across our consumer portfolios. This is important as we begin the planning for the eventual replacement of our Policy Administration System, in Vero. Now we continue to connect with brokers connecting or aligning our digital ambitions to theirs. And we have delivered the digital journeys for ANZ customers through their Go Money app. We are streamlining our business through the divestment of noncore general insurance products and services, with the sale of Asteron Life targeted for January 25, subject to the Reserve Bank approval. And we have significantly increased our flood and earthquake models to improve our underwriting capabilities to -- and exposures to natural hazard risks. Now turning to our strategic priorities. We have an ambition to achieve 27% market share by 2027 and an aspiration to achieve 30% by 2030 whilst delivering strong underlying margins of between 14% to 16%, largely achieved through improved customer and broker experiences, but supported by the 5 strategic priorities you see on the slide. We are transforming our pricing, underwriting and portfolio management. Now critical to Vero's strategy is a transformation of GI pricing and underwriting capabilities, including perils such as flood, earthquake and risk management and assessment. We will drive industry leadership in claims. We'll improve our digital capabilities and claims lodgment, reducing settlement times through simplifying claim processes and leveraging our claim supply capabilities. And we're going to have a particular focus on simplifying processes around motor claims that will include uplifting our repair network capacity to reduce time and cost of repairs. We will improve our customer distribution and digital innovation. We'll build a digital platform that will support growth by attracting new corporate partners. We will enhance broker and corporate partner experiences through the delivery of innovative digital solutions to provide scalability for future growth. We will deliver digital-first customer experiences. As we've heard earlier, AA Insurance will be the first business onto the Duck Creek Policy Administration System, significantly enhancing its go-to-market service propositions while delivering significant uplift in customer experiences. Through the next couple of years, we will simplify the Vero business by modernizing the product suite, reducing the number of products across our multiple broker groups and standardizing our operating processes to a one-size-fits-all approach. Now this strategic priority will help us achieve a scalable operating platform for future growth. We will also be leveraging our other scalable Suncorp platforms that not only improve digital experiences, but also introduce greater AI functionality. Now these will be across the telephony services, people, pricing and policy systems, which Adam covered earlier. And finally, we will be the leading advocacy -- the leading voice on advocacy. We'll continue to advocate for New Zealand's climate resilience with both central and local government as well as broader financial services industry. And we will continue to actively support the National Adaptation Framework, including adaptation policy and legislation that may be introduced or considered by the New Zealand government. And next week, I'll be accompanying the New Zealand Minister for Climate Change on a visit to London to meet with global reinsurers and to talk about New Zealand's plan for climate adaptation. In terms of growth and returns, key to our success will be a focused portfolio and go-to-market strategy. As part of becoming a pure-play general insurer, we've undertaken a comprehensive review of our GI portfolios to determine a clear where-to-play strategy for each portfolio, focusing on margin, on growth and returns on capital. Then we have identified the target returns for each portfolio and tested this against our risk appetite to achieve the right balance of exposure growth, risk mix and sustainable returns. These outcomes will be achieved through the investments we are making in our underwriting and pricing uplift, as well as simplifying our business that I mentioned earlier. And we are resetting our distribution efforts to more closely align with our key partners. Execution of the Vero portfolio strategy and development of how to win plans for the portfolio initiatives need to be framed through a broker-centric lens. This starts with a broker -- strategic broker approach informed by segmentation, to guide us on where to focus on how to balance our growth, risk mix and margins going forward. And this is going to be supported by leading go-to-market retains, improved broker priority and customer experiences and best-in-class claims experiences. And turning to our pricing and underwriting transformation. We're investing in uplifting this. Critical to our portfolio growth is the transformation of our pricing and underwriting capabilities across our intermediate products and services through 3 key areas: Technology enablers, People and talent and the Trans-Tasman capability sharing that exists. In terms of technology, we will have a modern platform that delivers improved pricing and underwriting accuracy, improve decision and executional velocity and enhances operational effectiveness while reducing operational risks. Transformation also requires the skills and capability of our pricing and underwriting functions to achieve better portfolio management, modeling and improved analytics. And in Suncorp, we have a unique ability to leverage the pricing underwriting frameworks experience and knowledge across our Trans-Tasman operating networks. Now we will sequence the rollout of this pricing uplift across '25, focusing on our largest portfolios first, so Home and Contents and Business Property. And then '26 will implement our new geospatial rating system and transfer our Rural and Motor portfolios onto the new pricing ecosystem. And then in the final year of the plan, we'll consolidate all the underwriting rules and ensure integration with Earnix as well as completing the transfer of the remaining portfolios onto Earnix. And finally, claims. It's a very important component to achieving our ambitions. And our focus is going to be targeted to improving those experiences across both our working claims and our natural hazard management. To deliver leading claims experiences, we have already delivered a single modern claims platform across all of our consumer and commercial products. We have modernized and simplified our products, making it easier for our claims team to respond to customers. We have delivered greater productivity through partnering claims journeys and reducing cycle times for simple claims. And these improvements proved effective during last year's weather events, with more than 93% of customers whose homes were uninhabitable during the events returned home by Christmas. And our current priorities in claims are: building resilience and driving faster claims settlements such as zero touch simple claims; a significant uplift in digital lodgment while leveraging the AI for streamlining claims management; and applying the learnings from the North Island weather event to continually evolve our response to natural hazard events, but also learning from the Australian experience and the recommendations coming from the various post-event reviews. Now in closing, I hope I achieved my objective of giving you a sense of the New Zealand business and its market positioning, its brands, its competitive advantages and strategic priorities. And as this concludes the formal presentations, I'll now hand to Steve and Jeremy, to take us through the Q&A.

Thanks, Jim, Michael and Lisa. Jeremy will just join me here. Now we'll move to some Q&A starting in the room. And by all means, just Steve and Jeremy show, anyone you want to talk to, they're all available. Just gives us a bit of time to get them up here. So let's start in the room. After all that, surely, there's a question.

Freya Kong from Bank of America. I've got a couple of questions. Just on reinsurance, I think the major reinsurers have been quite clear in wanting to shift away from frequency risks. Particularly the ones that are harder to model because of climate change. So often, the debate is not just about price, but also about program structure. Over the past year, globally, we've seen a lot of earnings volatility shift back on to primary insurers. Given discipline in the reinsurance market, how do you think about this in the context of your business and particularly given the importance of managing earnings volatility for shareholders?

I might just make a few comments upfront, and then, Jeremy can pick it up. That's certainly the case that in terms of the last 2 or 3 years, it hasn't been a benign environment, but it equally hasn't been an extreme environment. And what we've seen over that period of time as attachment points have moved upward across insurers programs around the world, ours being one example of that. A lot of the risk, I think, has transitioned from the reinsurers to the primary insurers and the reinsurers have borne significantly less of the weather that's been active in the last 2 or 3 years. Now obviously, I don't think yet, and you would expect us to say this is a primary insurer. The rates online for those programs in our vertical towers have really reset to reflect that risk. And in most recent dialogue with the reinsurers. In Europe, we've been making the point very much that we expect to see some of that adjustment come through. In terms of the traditional volatility covers, the aggregate covers and the like, yes, they have not been a feature of the market for the last 2 or 3 years. Obviously, we're testing that at the moment. Reinsurance is a cyclical market. We have had periods of time where those aggregate covers have not been available to us, and then they've become available to us over time. I think we're on the -- we're poised to sort of move into a bit of that dynamic. But again, very much reflective of the current experience, which is a global story, not so much an Australian story. Whatever happens in Australia over the next little while. And how we think about the benefits of those aggregate covers pass between the primary and the reinsurer. Jeremy?

I'll just add that there's different reinsurance markets components as well. So certainly, the major reinsurer counterparties have expressed a lack of appetite for those volatility covers. But there are other parts of the market that are still available for volatility covers. They're more limited in number than the main reinsurers. But that part of the market is still there, and you'll see our major peers just done a transaction with one of those counterparties, for example. So just -- you'll be careful around lumping it all into one market in the sense. But certainly, the major reinsurers have reduced appetite. There has been a push at the Rendezvous Conference in Monte-Carlo for with the brokers to try and get those major reinsurers to reenter some of that risk appetite. How successful they'll be on that, not sure yet, but there's certainly a drive for that. And the other thing I'd just add on volatility is one way of managing volatility is through reinsurance. The natural hazard allowance is a component in a sense. It's not exactly the same thing, but it's a component of that equation around managing the P&L. And then more fundamentally, is the primary risk. So one of the things that we are doing very actively in the home portfolio, which is where most of that natural hazard volatility comes through is quite actively trying to manage our exposure to what we call high, medium and low risks and obviously, skewing the portfolio, as Lisa has said and will take you through later. Skewing the portfolio quite successfully over a period of time and looking to accelerate out of the higher risk hazard risks and into the low risk. So there's different layers of attacking that volatility challenge.

Do you have another question?

Yes, if that's all right. On the natural perils allowance, it's obviously come up a lot in recent years relative to premium growth as well. How do you see the trajectory of that evolving given relative stability now in reinsurance? And is maintaining your margins sort of dependent on continued improvements elsewhere in the business, like the expense ratio?

Yes. On the natural hazard allowance, I mean, there hasn't been much of a fundamental reset in the allowance in terms of the modeling basis over the last few years, maybe a little bit of strengthening here and there, i.e., adding more confidence into that -- into the allowance. But the key drivers of it really have been around inflation in claims, growth in the portfolio. We've grown a lot of our portfolio is quite strongly. And then changes to the reinsurance program, obviously, also impact on that natural hazard allowance. So going forward, depending on where we land on reinsurance, we wouldn't expect to see a major change in that natural hazard allowance. So having said that, what I referenced before is that if they're -- in that equation of how we think about volatility, if there's an opportunity to think about putting some more confidence into that natural hazard allowance all within the margin guidance we've provided, we may make that assessment. And in terms of the margin outlook, there's no particular assumptions around natural hazard allowance driving ups or downs to that margin outlook. It's really a function of the -- and reinsurance for that matter, we see the outlook around reinsurance is flattish, maybe it's even down a bit actually in some of those parts of the program, and it's really then, the equation around where we see pricing, where we see claims. And we will be quite thoughtful around making sure that we're not -- that our pricing is addressing claims inflation and then making sure that we're managing our expense base efficiently as we've sort of taken you through the elements in that presentation.

Kieren?

Kieren Chidgey, UBS. A couple of questions. Maybe just following on the reinsurance front. The focus you've talked to sort of around volatility, is the main consideration around stop losses? Or you also will consider a whole of account quota share deals?

Yes. Look, I think we've talked consistently about and certainly kicked off a program of work when we flagged the sale of the bank to look at reinsurance structures more broadly, not necessarily constraining ourselves to any particular structure or form, look at the whole gambit of opportunity. And so we have consistently looked at whole of account quota shares when Michael Miller was running reinsurance. In fact, we actually built a model that would give us a sense of what sort of commission structure we needed to get to make that neutral to positive to return on capital. So we've got a good ability within the organization to model whole of account quota shares. But of course, as we've talked about consistently, again, we didn't really need -- we didn't have a strategic imperative to do that, obviously, with the bank sitting in the group. And equally, we couldn't make it work financially. So it was a reasonably sensible decision for us. Not so much an easy decision, but a sensible decision because, obviously, the market had a particular view around whole of account quota shares at the time. So having completed the bank sale, we think it's the right time. We think the market is significantly more rational in terms of the reinsurance market now. We think the opportunity is there for us now as a pure play insurer to look at the whole gambit. Whole of account quota shares will be one piece, which we've got a very familiar, very deep modeling capability around. And then there'll be the stop-loss type aggregate covers type concept. We are going to do this very openly, very transparently. We're going to look at it through the prism of the traditional metrics, which you can model quite well, return on capital margin. We also need to look at the potential for lower volatility, driving lower cost of capital, driving a multiple uplift, which actually manifests itself in an outcome for shareholders down the track. As Jeremy mentioned, we've got to check on, make sure the sustainability because there's nothing to be benefited if we can't renew these deals in 3 to 5 years. We need to make sure that renewable ability is there. And we have to look -- think about our long-term view of risk. So there's sort of 5 components in our view. We'll have an open -- we're open minded. We will look at the long term, and we'll be transparent about it. And that program of work, as Jeremy mentioned, will work its way through to our traditional renewal period.

Sort of specifically around the ROE lens, which has been your overarching lens around reinsurance for a number of years. Jeremy, I think the slide you put up illustrated that the earnings outcomes on average between your program and a stop loss of probably pretty similar through time. When you think about the ROE perspective, given the cost of those covers and also the capital implications, what are your early thoughts? I know you're yet to go to market on this, but sort of any initial thoughts on ROE outcomes?

Yes. Look, we put some premium on volatility protection, and we do that today. So our existing aggregate covers are that sort of ROE spectrum are pushing the boundaries of that economics. So we put some premium on trying to manage the volatility. And actually, the chart I put up around comparing the 2 programs is interesting in the sense that if you look at over that 10-year period, the program that we've got in place today would have actually provided more protection over that 10-year period. And look, I don't know what the cost of the alternative program is. But I know what the cost of ours is. I have a sense, I know the counterparty won't be cheap. And from a capital perspective, our current program provides good capital efficiency on the sideways ICRC covers that maybe an aggregate protection might as well, but wouldn't provide the cover up through the main tower. So I'm not sure that an alternate cover would be necessarily any more capital efficient. In fact, it might be the opposite. An aggregate cost over a period of time, premiums relative to the net retained amount, don't necessarily make sense, but we'll go through the work. I mean, the market is moving. And so the hardening seems to have finished, subject to experience for the remainder of the year, et cetera. As Steve said, we'll explore it all and see what makes sense.

I just had one final question, changing tack to the digital insurer investment. Can you just give us a little bit more clarity around the timing and mix around CapEx, OpEx over the next 3 years for that $560 million investment? And also interested longer term, particularly given, I think, Adam flagged sort of consideration of next-gen claims system at some point down the track, how you're actually thinking about long-term IT investment for the business as a rule of thumb percentage of premium or how we should be thinking about it?

Yes. So with the digital insurer, we said about 90% of the $560 million gets spent up to the end of '27. And in about just less than 50%, 45% odd gets capitalized. And of that amount, we've already expensed about $50 million in FY '25. So the residual then goes into '26 and '27. And of that, it's sort of nearly 50-50 CapEx, OpEx. And it's allowed for in that margin guidance that we've given. So there's no incremental step-up in cost relative to what we've seen. We always run a component of our discretionary investment spend that's devoted to those sorts of projects. We just divided a little bit more relative to others this time through on the digital insurer. So it doesn't impact on the result in a step up in the expense base. And then what I've referenced before is that when you think about investment in technology, investment in growth, investment in change, there's 2 components to it. One is what's the financial constraint, if you like, around it, the financial numbers. And the other one is the organizational capability to how much change can an organization cope within one 12-month period. And when we think about those 2 things, the amount of change investment that we've got in our expense base today, we think is roughly right. And so rather than think about it as a percentage of premiums per se, it's more of a -- what is that investment spend today. And we think that's probably at an optimized level now to sustain the growth aspirations we've got in the business without impacting our margins going forward.

And specifically, the expense ratio within the margin doesn't change dramatically?

Correct. I mean, look, over the last few years, we've said flat but it will go down a little bit because of the premium leverage, but it's flattish, yes.

I think there's a question behind, and then we'll come back to you, Andrew.

It's Anthony Hoo at CLSA. Firstly, can I ask a question on the consumer business. In Lisa's presentation, talking about market share, targeting #1 market share. But if I just ask a broader question over the last few years, it seems like you've been losing market share. So can you just talk about that? Are you saying you want to reverse that trend? Or is your approach a bit more targeted and nuanced?

Yes. I will ask Lisa to come up and fill in the answer. And if I sort of benchmark around what our market shares are today, in Motor, we're in the higher end of the 20s. And I sort of think we have reversed the trend around market share loss in Motor, particularly over the last couple of years, we've been growing at 2% or 3%, which is pretty much with market. So that's sort of reversed a bit of that trend. In Home, the focus has been on remediation, making sure that the portfolio is in good health. And Lisa talked about get-go through in a bit more detail. The focus we've had on underwriting for the high, medium and low payroll risk, which has significantly improved the quality of our home insurance business. So that's less about market share per se. It's more about improving the quality of the market share that we've got. So Lisa, do you want to fill in some of the blanks?

Yes. Firstly, I think excellent answer, Steve. So maybe I'll just build on a few points to that. As Steve touched on, we are #1 in Motor. Our intent is to continue to be #1 in Motor. You would have noted over the last couple of years, we have been able to grow our Motor customers and at the same time, managing margin restoration given some of the changes in input costs. From a Home perspective, we do have ambition to be #1 in Home. And we know if we look at the last couple of years, Home is a really important product for customers and communities. We have great brands, great pricing and reflection capability. And as Steve touched on, as we are growing, we're being very mindful of growing in the right areas. We've got that capability to help us now. And then importantly, investing in a claims proposition for our customers so we deliver what we promised at the get-go. From a Home perspective, we have been growing. Albeit, as Steve touched on, we've been really thoughtful around that growth. We have had to restore margins in Home given the increases in input costs. And we have been very deliberate in terms of where we are growing, as Jeremy touched on in terms of the volatility. So what I would say is we do have strong ambition. There are 2 markets of which we already have really strong market positions. But we do need to balance and be disciplined in terms of managing margins consistently within the target ranges and getting the right balance with growth as we continue to maintain that #1 leadership position in Motor and then start to build in Home.

Just a second question on -- in reference to Slide 11, your risk-return framework. You said on your current settings, it leads to an underlying margin of 10% to 12%. Just a question on what would be the most obvious way for you to go beyond the 12% in that framework? What needs to change?

Yes. I think one of the key principles behind Jeremy's presentation there was to set up the financial architecture of the business. And if you sort of work it through from the return on incremental capital or tangible capital, the numbers that Jeremy quoted in the low 20s, they are good returns on every incremental dollar of capital that we invest, translates back to a return on the book equity position of around 10%, which we think is about right for our business. And that translates then into an underlying margin of 10% to 12%, which is then dispersed across the portfolio in the manner that we broadly outlined today. Once you start to push above that -- and there will be circumstances where we could push above that. You start to push those returns on tangible incremental capital into the mid-20s and above. And the question that goes to your mind then is how sustainable is that? What I'd prefer us to think about is those returns being through the cycle, resilient. And everything we've done over the past 3 to 5 years has been to build resilience into that margin, whether it be high natural hazard allowance, less reliance on reserve releases and the capacity we have to invest in our business. So resilient 10% to 12%. And so that investors, when they see our underlying margin, our reported margin, there's not a big gap between the 2. And then to use the dividend from all of the work we're doing, having restored the margins, use that dividend into creating a sustainable and a growing business. And so growth then gets translated into a higher PE, gets translated into a competitive advantage for this business relative to its peers, and then gets translated through all of that into a TSR outcome for our shareholders. So the financial architecture has been really important to set the guide rails for our business. Yes, there will be circumstances where you can do the math so we could get to a higher number. In periods of time, that might be the case. But the financial position that we want to set ourselves for over the next planning round is to deliver the resilience in that margin, get growth back into the business in a substantial way and translate all that through margin through multiple and then into TSR. Jeremy, did you want?

No. Perfect.

Andrew?

Andrew Buncombe from Macquarie. Two questions from me. The first one, first, Steve, and potentially Adam as well. I suppose, without wanting to put a label on it, I suppose, specifically the Earnix rollout for the pricing engine. So I'm just interested in the discussions that you have internally as you roll out something like Earnix through the pricing engine, which has been well known internationally for including pricing mechanisms that have been banned in some states in the U.S. and also the U.K. And I suppose, from a social and a regulatory point of view, but from a CapEx point of view as well, are you investing this to then maybe the next number of years need to unwind some of those specifics, just some of the thinking around that?

I'll Make Adam to come up first, and then maybe Lisa can come up. There's 2 elements to Earnix. One is the technology that's available. And what that does and what that allows us to do. And then there's the real competitive advantage of what goes in -- gets plugged into the pricing engine, which will be some of the stuff that you'll see in one of the breakout sessions. So I'll start with Adam. And then, Lisa, if you want to come up and pick up the second part of it.

Yes, thanks, Andrew. I think you touched on the way we think about it. So there's the engine itself and the technology that we licensed from Earnix. There's in the models that you build on top of that engine. And then there's the data sets and rating factors that you use to drive the pricing and underwriting. The platform itself kind of doesn't impose the way that you're using it with respect to some of the types of pricing that you described. And so it's entirely within our decision framework in terms of how we think about the use, particularly when you're thinking about the use of machine learning and AI in those models and the principles that I talked to in terms of just ethics and lots of focus on that as regulators think about use of AI more broadly. So it's something that we actively think about. But I wouldn't use Earnix as the kind of the tag line for that. I think it's more just our broader pricing philosophy.

Lisa, do you want to add?

Yes. Look, similar to what Adam said in terms of -- there's the engine itself. One thing Earnix is really good at is ingesting our models and allowing us to translate them, our risk-based models. And as you know, that was one of the key reasons we've moved from our previous pricing engine into CaPE, really to make sure that we were able to translate that risk -- that granular risk model, whether it be in terms of risk address or whether it be the various perils and translate that down to the customer. But as Adam said, in terms of the models we put in it and also the constraints we put on the model to make sure that we are pricing appropriately for risk and have robust ethics frameworks. On that, we continuously review in terms of our frameworks. We're also, as you know, building in strong controls around our pricing environment as well to respond to various feedback. So like Adam said, I wouldn't necessarily translate just because of the brand of the engine, it translates to all those issues you might be referring to.

Excellent. And then my other question, probably for Michael. Just interested in your thinking about why you're looking to write higher hazard or more typically specialized risks under your own license for things that would typically go through underwriting agencies? Just that's obviously where you're going to be looking to grow quite significantly going forward. Why do that in a nontraditional way?

He should be very well rehearsed in his answer, Michael?

There's probably 2 parts to the answer. So one is, why don't we do more with underwriting agencies? And the second is why we're doing what we're doing. So the first one in terms of agencies, we back one, which is called NTI, which is very good, and we own half of that. We're very aligned, and we think that works very well. Obviously, there's a lot of regulatory scrutiny going into this area right now. I think it's an area we'll leave alone, and let's see how that develops. But the one thing we did learn out of all that is we've got our big portfolios. So a property, for example, and we pulled it apart in terms of types of risks in there. And so this high hazard area, we write today. It's $40 million or $50 million there in the portfolio. And it takes a long time to write it because we've got to really up 30 risk engineers. It takes a long time to underwrite it. But the results are very good. And so our view as well that high hazard demand is there. We hear it. We can actually have a team just hesitate looking at that. We have replicated some of the work the agencies do with good reinsurance treaties, and we think it's a good business to write. But as I said, they're small niche products. So I think the $100 million, $150 million max from its $40 million today, and we'll go through it very carefully. And if we prove that out in terms of that niche, then we'll replicate it. And so we'll look at 3 to 4 of those products over the next few years. But I'm pretty -- it's a good area to get into. The metrics say it makes sense. The reinsurers that we've spoken to have backed us. So we're very comfortable.

Dougal?

Dougal Maple-Brown, Maple-Brown Abbott. Slide 5, Steve reminds us what a great job you and the team have done over the last 5 years in cleaning up this company. Obviously, the bank sale was a massive deal. Personally, selling the SMART shops just before COVID for a big price is my personal favorite. That was then, this is now. 2 of your 3 business heads have just stood up and given quite ambitious market share targets out to 2030, I might have missed Lisa's. But to the extent that M&A, inorganic growth plays a part, probably unlikely in New Zealand, but possibly here, would you care to share any parameters, guide rails, financial requirements if shareholders' capital is used in this way?

Yes. In terms of divestments, I'm not sure there's anything left to sell. So everything else is locked down now. So that's -- I think there's a full stop after that, and I'm trying to make that very clear. Look, we wouldn't rule anything out, obviously. But the purpose of today was to outline what is in front of us in an organic sense. I have a natural bias to the organic plan because I think it can deliver value. Every rock we turn over, there's an opportunity. And you talk -- in Michael's business, just exposing that to the post bank sale light an opportunity that sits there. You think about direct SME, direct SME where we've got a very small portfolio of business today, but we generate returns of -- margins of 15% to 20%, great returns on capital using the brands that we've got in the market. No massive incremental investment in marketing, just simply getting some investment into the digital connectivity at opportunity. So I think if we were to consider anything inorganically down the track, it's got a very high hurdle to get over. Not only from the return that we would expect it to get relative to the organic plan, but also the disruption that it would cause to the program of work that's sitting there in the tech environment. Anything we brought in is not going to be on the flight plan that we've currently got for Duck Creek policy and then claims. So automatically, that would throw a bit of that out of whack. So it's a very high hurdle. I'm not saying we're not going to do it. I'm going to say rule anything or really anything up, but it's a very high hurdle. I really do believe that there's an organic pathway to this business through to 2030 for us to allow us to reach our ambition, and we don't need to do anything inorganically to achieve that. Michelle?

Michelle Wigglesworth, Australian Ethical. I imagine that your strategy to pivot to low-risk, high-margin customers in home would not be yours alone. How do you attract these customers? And if it's on price, how do you ensure that margin isn't competed away?

Yes, it's a very good question. I think it isn't our strategy alone, but it's one of the reasons why we prioritized Earnix in pricing ahead of probably the other investments that we've made. And one of the things that our previous pricing engine didn't allow us to do is to price to that granular level of risk. And so what that meant was when we'd have an input cost increase, so that 10%, 15%, 20% input cost increase, inflation, reinsurance or other then we'd have to disburse it almost uniformly across the portfolio. And what that meant was that higher risk or that extreme risk was being underpriced and the lower risk was being overpriced. And automatically, you're providing an opportunity for the smaller players, the start-ups, those that have come into the industry with those more sophisticated pricing engines to actually attack that customer base. And so why we prioritized Earnix, why we prioritize the modeling that you're going to see is so that we could remove that opportunity for them to grow. And so I think -- 2 elements will occur through these investments. The first one is we'll be able to grow the portion of low risk from -- and that's 7 perils. That's not just flood, as we talk about 7 perils were able to grow that at good margin, good return. And we'll be able to price at the high and the extreme peril categorization at a more technical price. Now that will come off, obviously, over time. But we'll be able to price more technically. So I think that the overall composition of the book will improve. Yes, there'll be more competition for that smaller -- for that lower risk cohort, but we think very much that we can deliver good growth in that category of risk at the appropriate margin by leveraging our scale. We've got scale of claims, we've got scale of pricing, we've got scale of risk. So I think we can do that all satisfactorily. The key element has been having that differential in terms of their pricing engine.

So does that mean that you can price lower than the competitors that have previously been in that space because of your scale?

Yes. Look, I'm not saying that we're going to price lower than our competitors. I'm not giving a direction on that. But if you've got scale and you've got modern systems and you leverage that scale well, then you will be able to create the growth in the portfolio by being able to price better than your competitors if you use your scale well. And so across everything you've seen today, to sum up the strategy that we're pursuing. You've got a small number of sort of brownfield type insurers who are operating off older technology, but have good scale. And then you've got smaller players with no scale, but with greenfields technology because they've got their new entrants. So the race is on. They're trying to build scale. And we're trying to build out our systems to make sure. If we can do that, which is our strategy to keep our scale and grow our scale, have modern systems, then we think we're in a pretty strong position.

Sally Warneford from Schroders. I just -- a lot is made of data and its ability to enhance your ability to choose risks, to price them adequately. But everybody else says that. Everyone has data, everyone can get data from external sources. The larger players here have a lot of data, too. Just like you, they have a lot of customers. So how can you prove to us that your data position, which has been flagged in all of the presentations, is better than the competitors? And how can we see that? How can we measure that?

Yes. I'm going to provide a comprehensive answer to that now, Sally. But when you get talk to the team and they asked the same question. And get a sense of the sophistication of the data that we've got and how we're utilizing that. I think -- and I would say our data position is incredibly strong. And it should be. We've got 100 years of it, and we've got scale. The key variable for us has been building the technology to allow us to deploy that. So maybe ask that question in the session with Michael Gassman and [ Cohen ]. Just see if you get a sense of how we're leveraging our wisdom of the crowds modeling approach, which is taking out our data. On top of everything you talk about. The traditional insurance model has been what an insurer knows about you, what we know about your characteristics and pricing to that. Don't lose sight of the fact that in the future insurance will be about that, but also, the data that you've got about yourself and how you try and monetize that to create a lower insurance premium relative to someone else who doesn't. And the core of that is putting this Policy Administration System. If you cannot -- if customers seek to monetize data over time and you haven't got systems that are flexible enough and agile enough to deliver, then you're going to be left behind. So that's why we've done data in the cloud, Earnix for pricing, Duck Creek for policy and then we'll move to claims, in that order, because we think that's going to be the evolution of insurance over the next 6 to 10 years.

Just a first one -- sorry, Julian from Goldman Sachs. Can you maybe just talk through some of the recent trends, just the pricing trends since the result by class of business, if you could?

Yes. So I think we flagged the full year results, that we expected GWP growth of mid- to high single digits. We're still on track for that for the full year. I think the pricing dynamics around the consumer portfolios in Australia Home and Motor are pretty much consistent with what we flagged at the full year results. So reasonable premium growth in home, in motor starting to come off a little bit as we've seen those input costs in motor, supply chains stabilized, et cetera. So it's consistent with what we've said at the full year results. I think in commercial, and that's consistent through the New Zealand consumer portfolios as well. I think the personal injury portfolio as we've probably seen a little bit more price than we might have expected in the full year results. Michael flagged some increase in frequency in New South Wales, we'd expect to forward price for. I think the one where we've seen a little bit more change is in the commercial portfolios, both here and in New Zealand, where we are seeing rates come off, but it's quite specific to individual portfolios within consumer -- within commercial. And so we've seen rate come off a little bit more than we might have expected. I think we expected it to come off in property, but maybe a little bit more. Some of the other portfolios are going okay. So I think on balance, rates certainly coming off a little bit on some of those larger commercial portfolios, which we expected, but...

And I mean, just the -- I mean, given that rate has -- the messaging is consistent in some lines, is that because inflation has been persistent relative at a single level to what you were flagging at the result? Or it hasn't come off as materially as what you might have been expecting?

No, I think it's sort of -- it's -- again, it's sort of portfolio specific, but it's largely in line. So we expected inflation to come off in motor, and it has. It's sort of been roughly in line. I think the only 2 call outs to say is one is in that CTP New South Wales, a little bit an unexpected increase in frequency there. And the other one is in home, where we've seen some volatility around fires. But fires are going to be a bit volatile. We had summer September, some in July. So there's some volatility in home. But otherwise, it's all tracking to what we expected. Motor frequency and to some extent, cost in New Zealand is probably a little bit better than we expected, but it's largely in line.

We'd have to -- Nigel, did you have anything? Sid? Just quickly, last question. I can't go without Sid getting a question.

Can I ask 2 questions or just -- quick one. Just the life proceeds, just -- we haven't heard anything about that for a little while. Just -- can you just comment on whether we will get the NZD 410 million back and whether that's separate to what you've committed to around your payout ratio and the ability to fund ongoing buybacks over time?

Yes. So yes, the NZD 410 million comes back. That's Kiwi, so translate that to Aussie. And so $125 million should be available for available in the first half of next calendar year, and then the residual in the second half of calendar year '26. And it is incremental to the $4.1 billion we've spoken about for the bank. And as I said, that would sort of -- that would go to start seeding that on-market buyback facility I spoke about.

So that is what seeds the on market?

It's not the only thing that's seeds it. So that the dividend payout ratio at 70%, we'd expect that dividend payout ratio to also generate organic capital excess to the needs.

Just -- the other question I had was just around the process by which you allocate capital to each of your divisions. Am I correct in thinking that you're saying that you're -- the ROEs by portfolio say, RoTEs by portfolio roughly similar? And if you could just comment on how you're allocating capital.

Correct. Now they're roughly similar, but they're not all at that 23% to 25%. And because some of it will depend on market dynamics at the time. But that's what we -- over a cycle, aim for, for each portfolio. There might be some small ups and downs around it at particular points in time. And in terms of the way we allocate, can we use a risk-based capital model to allocate? Which is -- which we think is a rough reasonable proxy for the volatility in each of the portfolios. So it's a risk-based capital approach.

Not based on your margin?

No.

Thanks, Sid. Now that brings to an end, I think, Q&A.